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Starting a new business has never been easier. We handle the paperwork, so you can focus on growing your business. With our quick and easy application service, simply choose what type of business entity you want to create, and what state you are located in. We’ll do the rest. Let’s get started today!
A Corporation is considered a separate legal entity from its shareholders and thus is taxed separately from the shareholders of the company. Unlike S-corporations, where the business’s profits and losses are reported on the owners’ personal tax returns, Corporations must file independent corporate tax returns.
Corporations are subject to different tax rates than individuals and may be able to claim additional deductions and tax credits. Corporations may retain profits at the end of the year to be used for future business operations, or may decide to distribute a portion of the company’s profits to the shareholders in the form of dividends. Dividends are not considered deductible for the corporation as a business expense, and thus are taxable both for the corporation giving the dividends as well as for the shareholders receiving them.
One of the main benefits of the LLC business structure is that it allows the company’s owners (called “members”) to report the business profit or loss on their personal tax returns.
The business is granted limited liability protections. The Internal Revenue Service may treat single member LLCs as sole proprietors for tax purposes, with income flowing to the business owner’s personal return. The Internal Revenue Service treats multiple members LLCs as partnerships, unless the company elects to be treated as a corporation . The Internal Revenue Service does not levy company-level taxes on an LLC, but some states do (Check with the Secretary of State). Members who work for an LLC are usually required to pay self-employment taxes.
|Definition||Combines elements of a corporation and a partnership.||Separate legal entity with legal rights and liabilities that are different from shareholders (owners).||Separate legal entity with legal rights and liabilities that are different from shareholders but that offers tax advantages by the IRS.||Two or more people owning and operation the business preferably with a partnership agreement.|
|Number of Owners||No limit||No limit on shareholder||100||No limit|
|How to Start||State regulated and Articles of Organization and required tax numbers.||State regulated. Need Articles of Incorporations, bylaws and tax numbers.||State regulated. Need Articles of incorporations, bylaws and tax numbers.||Should have an agreement and required tax numbers.|
|Management Control||Rests with management committee (owners or those shareholders).||Rest with the board of directors appointed by the shareholders.||Shared by owners shareholders.||Shared by general partners according to partnership agreement.|
|Taxation||Taxes can be assessed several ways based on the structure of the company but is taxed once.||Profit is taxed to the corporation and then dividends to owners are taxed again.||Profits from the company are taxed once. Profits are split among owners.||Profits from the company are taxed once. Profits are split among partners based on partnership agreement.|
|Personal Liability||Liability limited to corporation assets unless a personal guarantee is signed.||Liability limited to corporation assets unless a personal guarantee is signed.||Liability limited to corporation assets unless a personal guarantee is signed.||General partnership personal assets are at risk, limited partnership.|
|Transfer of Ownership||Yes||Yes||Yes||Based in partnership.|